• solution
• services
• supports

the best for your business

• Home
• Marketing
• Nonprofit
• Search
• Contact

Market segmentation

Market segmentation is a result of the heterogeneous consumption behavior due to the diversification and specialization of consumers' needs. Considering this, the market can not be defined as a global, undifferentiated entity, but as one structured by various groups of consumers or users.

The process of market segmentation involves the division of a market in subgroups of consumers with specific requirements and preferences, who represent a demand big enough to justify distinct marketing strategies. Therefore, market segmentation divides the market in similar groups of consumers when it comes to their features or shopping habits.

The market segmentation requires a process involving the following stages:

• Identifying the segmentation criteria
• Formation and description of the resulted segments
• Evaluation of each segment from the company's perspective
• Selection of one or more market segments that will become the target market for the company.

The criteria considered for market segmentation are the variables that create differences in market members' behavior. So, the identification of those criteria should consider, first of all, the structure of the market(individuals, companies) and then the main variables that define the members of the market.
There can be defined different criteria for different markets, like final consumers' market and business market(constituted by companies only).

Final consumers' market – segmentation criteria
The market of final consumers is constituted by individuals, members of a population located in a certain geographical area, who purchase the products for consumption or use, not for re-selling. The variables that can be considered for the market segmentation focus on the basic features of the individuals:

• Demographic variables: age, gender, ethnicity, profession, size of household, income, education, religion.
• Geographic variables: region, climate, lifestyle, population density.
• Psychological variables: social status, personality, lifestyle.
• Behavioral variables: consumption rate, expected benefit, brand loyalty, price elasticity.

Business market – segmentation criteria
The business market comprises companies that purchase various goods and services in order to process, sell or rent for profit. The main feature of this market is that its members, both the demand and the supply, are companies. Thus, the segmentation variables are features that define a company:

• Geographic location – local, national or international level.
• Activity segment – industry, services, construction, agriculture.
• Company size – small, medium, big companies.
• Behavioral variables – purchasing frequency, level of purchasing centralization, suppliers selection process.

Considering the identified segmentation variables, the division can be made considering one or more of these variables.

Market strategies concerning segmentation
After the identification of market segments considering the various criteria, the company can adopt one of the following market strategies:

• Concentrated market strategy – focused on only one market segment.
• Differentiated market strategy – focused on more or all market segment, with marketing actions specific to each segment.
• Undifferentiated market strategy – focuses on all market segments with the same market actions. It is applicable when the demand is uniform and there are no differences between the market segments.